thirteen distinct legislative bodies acting upon this one subject, there would necessarily be differences; these differences in course of time would demonstrate advantages, and this, taken together with their closer relations to the occupations of the people, would necessarily produce improvement in money.

It is not our purpose to follow the growth of paper-money under state legislation-much of this money was positively bad, but before the breaking out of the civil war and the issuance of greenbacks, there were many instances where the money had reached a stage of development fully abreast with the best economic teachings of that time, and we need not doubt that, if the State banks had been permitted to continue the issuance of paper-money, we should by this time have a money as good as any nation has.

C

ANADA to-day, with a gold basis of about thirteen million dollars, supplies all her monetary needs with great efficiency; she is not only able to supply all her own legitimate wants, but has for many years rendered substantial aid to our western people in the movement of crops in the autumn; this was notably the case in regard to the heavy crops of 1891.

Canada's total authorized banking capital is something over seventy-five million dollars, and the paidup capital a little less than sixty-two million dollars. The banks are permitted to issue notes equal to the amount of their unimpaired capital; the average circulation of bank-notes is about thirty-five million dollars, and the till-money is about fifteen million dollars, leaving twelve million dollars in reserve for extraordinary contingent demands. The demand

for money during the harvest months is increased about twenty-five per cent., and the large bank-note reserve enables the banks to meet this special call for money without adding a fraction to the rate of interest; for when these notes are not in service, they are lying in the vaults of the banks without cost to the banks or to their customers.

There is no bond security for the bills; the only security is a first lien on the assets of the bank and on the double liability of the stockholders, the total amount of which security averages four or five times the total possible circulation, and seven times the average circulation. There is, besides, a noteredemption fund, contributed by the banks and held by the government for the immediate redemption of the notes of insolvent banks. This fund amounts to five per cent. of the total sum of notes in circulation during the previous year, each bank being required to keep its proportion good. The holder of a failed-bank bill has, besides, the guaranty of every solvent bank for the payment of his bill; the result is that every Canadian has a sense of complete security in the money of the country.

There has been no bank failure in Canada during the term of the present or of the preceding Banking Act (which latter dates from 1880), in which the

assets of the insolvent bank were not sufficient to pay all the bill-holders. So far as can be ascertained, there has been no general suspension of specie payment in Canada within the past forty years; there was certainly no suspension there in 1857, when the banks of the United States suspended, nor has there been any since that time.

In submitting Canada's monetary system to the test of fundamental principles, the only defects we find are those which arise from legislative interference: her government has reserved to itself the right to issue legal-tender paper-money; the limit of such issue, as at present fixed by statute, is twenty million dollars, and of this total about nineteen million dollars has been put out. The government has also established a number of post-office and other savingsbanks, competing with the corporate banks for the deposits of the people, thus crowding up the rate of interest upon the whole Dominion. As might be expected there is a bond security to the government paper-money. Gold being the only standard of value in Canada, this paper-money has for its basis of redemption fifteen per cent. in that metal, and for security ten per cent. in Dominion bonds guaranteed by the British government, and seventy-five per cent. in Dominion bonds not so guaranteed. The

government retains to itself the issuance of all papermoney of a lower denomination than five dollars; it also requires each bank to carry forty per cent. of its reserves in Dominion notes; there are, however, no statutory restrictions on bank reserves, that matter being left very properly to the judgment of the banker. A reserve that is fixed by statute may operate as an embarrassment, but cannot as security. Bank auditing, bank statements published monthly, a strict holding of the banks to their obligations under penalty of forfeiture of their charters, and, added to these, individual punishment for irregular or criminal banking, are the best securities the public can have, and these Canada has provided.

No better example can be found to illustrate the divergence in monetary ideas between the banker and the politician than is furnished by Canada. In all the essential characteristics of banking, the former is abreast with the intelligence of his time, while the latter still clings to the old notion that the State can arbitrarily enforce credit. By making the Dominion notes legal tender, and then compelling the banks to carry forty per cent. of their reserves in these notes, the Canadian government has needlessly burdened the banks, and in so doing has betrayed ignorance of monetary law. The same principles govern the relation between debtor and